Infrastructure firm Cardno eyes US debt ceiling deadline

Global infrastructure business Cardno is one of a number of Australian-based businesses carefully watching events in Washington, as the threat of a US debt default looms next week.

Cardno specialises in the development and improvement of physical and social infrastructure for communities around the world, with 8,000 staff working on projects in 85 countries.

It has been expanding rapidly in recent years, particularly in the US, with a vigorous campaign of takeovers.

More than half Cardno's business is now based in America, with 5 per cent of revenues coming from US federal government contracts.

This week it bought the structural engineering firm Haynes Whaley in Houston, Texas.

Cardno chief executive, Andrew Buckley says he "absolutely" hopes the US does not slide back into recession.

Mr Buckley says so far the US shutdown and debt ceiling crisis has not had any significant impact on Cardno.

"However, if it went on for several months, and also obviously if we went into a US default position, that would clearly have a significant impact on the economy and on the US market generally," Mr Buckley said.

Growth strategy

Cardno has recently been looking at two strategic directions in the US, Mr Buckley says.

"One is just to increase our overall engineering capacity there, because we have made a number of acquisitions in recent years in the environmental space, so shifting back a bit towards that engineering area is one of our strategies," he said.

"The other point about this particular acquisition is that it's structural engineering.

"And previously in the America's market we've been largely civil engineering based ... this business will now give us the opportunity to now tackle the design of the actual buildings, and that's a big cross-selling opportunity for us."

Cardno has made more than 40 acquisitions since 2005.

"We've set fairly audacious growth targets over a number of years and what we decided to do was to supplement the organic growth of the business with some M&A [mergers and acquisitions] growth," he said.

"And we think we've got a fantastic model as to how to carry out those mergers and acquisitions and make sure they yield value to our shareholders, because obviously the common face of some M&A processes is not been positive. "

Mr Buckley also is expecting Australian business conditions to start to improve and sees signs of life in some markets, particularly in New South Wales.

"Both in the private sector but also with a number of significant major infrastructure projects coming on," he said.